Overnight Finance: Mnuchin promises new Russia sanctions after uproar | Dow drops ahead of Trump State of the Union | GOP senators call on Trump to protect NAFTA | Regulators subpoena major bitcoin exchange

Mnuchin promises more sanctions on Russia after outrage over report: Treasury Secretary Steven Mnuchin said Tuesday the Trump administration will impose financial sanctions on dozens of wealthy Russians despite the president declining a congressional deadline to do so.

Mnuchin took heat from Republicans and Democrats on the Senate Banking Committee over the administration’s decision to not impose sanctions by a Monday deadline.

“This should in no way be interpreted as we’re not putting sanctions on anyone in that report,” Mnuchin said at a hearing.

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He added that the report issued Monday on suspected financiers of Russian government political efforts is not a substitute for financial restrictions Congress mandated in a bill passed last year.

Trump announced Monday night that the current regiment of financial sanctions on Russia was doing enough to deter the country’s unstabilizing political and military actions.

Democrats excoriated Trump, whose campaign is the subject of a special counsel investigation over possible collusion with Russia, for declining to follow Congress’ directive. Some Republicans also expressed concerns about the lack of new sanctions. Here’s what they said: http://bit.ly/2GtyQw1.

 

Dow drops 362 points ahead of Trump’s first State of the Union: The Dow Jones Industrial Average closed Tuesday down 362 points, the market’s worst day since August.

At one point, it was down 400 points, the largest drop in the key stock index since June 2016. It’s the second straight day of losses for the Dow, and largest single-day drop under President Trump.

The value of medium- and long-term U.S. Treasury bonds increased Tuesday. 
Stocks have skyrocketed over the course of Trump’s first year in office upon booming consumer confidence and a major corporate tax cut. Trump and his aides have taken credit for the massive rise, calling it a referendum on and reflection of their economic agenda.

Even with the drop, the Dow is up more than 8,000 points since Trump was elected in 2016. The Dow closed at a record high more frequently in 2017 than in any other year in its history, breaking the mark of 69 record highs set in 1995: http://bit.ly/2GxAe0o.

 

Schumer: Trump should thank Obama for economy: Senate Minority Leader Charles Schumer (D-N.Y.) said on Tuesday that President Trump should thank former President Obama for the country’s economic growth during his first State of the Union speech.

“If you’re going to pat yourself on the back, give a shoutout to Barack Obama because he did even better than you in job creation,” he said.

Schumer added that Trump was handed an “already healthy economy,” but “two words we won’t hear President Trump say tonight about the economy: ‘Thanks, Obama.'” http://bit.ly/2GzlvCs.

 

Listen – The Hill Podcast: The good, the bad and the ugly of Trump’s economic claims: http://bit.ly/2GvEVbh.

 

Senate Republicans call on Trump to preserve NAFTA:  Three dozen Senate Republicans on Tuesday called on President Trump to preserve the North American Free Trade Agreement (NAFTA).

Sen. Cory Gardner (Colo.), who spearheaded the letter-writing effort, along with 35 of his colleagues, sent the letter to Trump on Tuesday ahead of his State of the Union address highlighting the benefits of NAFTA and offering their help to improve the agreement.

“The next step to advance the economy requires that we keep NAFTA in place, but modernize it to better reflect our 21st century economy,” the 36 senators wrote.
“We look forward to working with you and your administration to make that modernization a reality and bring Americans even greater economic success,” they wrote.

Concerns among Republicans about the direction of Trump’s trade policy surged last week after Trump decided to follow the recommendations of the U.S International Trade Commission and levy hefty penalties on imports of solar panel technology and washing machines. The Hill’s Vicki Needham reports: http://bit.ly/2GumnYK.

 

Happy Tuesday and welcome back to Overnight Finance. I’m Sylvan Lane, and here’s your nightly guide to everything affecting your bills, bank account and bottom line.

See something I missed? Let me know at slane@digital-stage.thehill.com or tweet me @SylvanLane. And if you like your newsletter, you can subscribe to it here: http://bit.ly/1NxxW2N.

 

NAFTA talks progress but pace is too slow: Trade leaders with the United States, Canada and Mexico said on Monday they made progress in updating the North America Free Trade Agreement (NAFTA) as the sixth round of talks concluded in Montreal.

U.S. Trade Representative Robert Lighthizer said the NAFTA discussions must move at a faster clip if the trading partners want to alleviate uncertainty and seal a deal.

“We finally began to discuss the core issues, so this round was a step forward,” Lighthizer told reporters at the end of the weeklong round of talks in Montreal.
“But we are progressing very slowly,” Lighthizer said in the closing press conference. 

Talks among the three trading partners are set to continue in Mexico City in late February or early March. There are plans for an eighth and possibly final round in Washington, D.C., in the spring, although there was chatter last week that talks would continue deeper into the year. Vicki Needham has more: http://bit.ly/2Gyu00z.

 

Financial regulators subpoena major bitcoin exchange: U.S. regulators are probing one of the world’s largest cryptocurrency trading platforms with ties to a controversial digital currency.

The U.S. Commodity Futures Trading Commission (CFTC) sent subpoena letters last month to Bitfinex, a cryptocurrency exchange, and Tether, a company that offers digital currency that it says is tied to the value of the U.S. dollar, Bloomberg reported Tuesday. 

Tether has long been a target of skepticism in the cryptocurrency community, with critics speculating that Tether doesn’t actually hold enough dollar reserves to back up the claim that the cryptocurrency’s value is tied to the dollar. 

Cryptocurrency markets sunk significantly on Tuesday in reaction to the news.

Bitfinex and Tether are closely linked and share the same CEO, Jan Ludovicus van der Velde.

“We routinely receive legal process from law enforcement agents and regulators conducting investigations,” Bitfinex and Tether told Bloomberg in a statement. “It is our policy not to comment on any such requests.” The Hill’s Ali Breland has more: http://bit.ly/2GvG2Yv.

 

Pfizer plans investments, bonuses in wake of tax law: Pfizer on Tuesday announced plans for new investments and bonuses following the enactment of the GOP tax law.

The pharmaceutical giant said it is going to make about $5 billion in capital investments in the U.S. over the next five years. The company also said it has set aside $100 million for one-time bonuses to be paid to nonexecutive employees in the first quarter of this year.

Additionally, the company made a $200 million contribution to its charitable foundation following the law’s passage, and said that it plans to make a $500 million contribution to its pension plan this year.

Pfizer reported a benefit of about $11 billion in 2017 as a result of the new tax law, “primarily reflecting the remeasurement of U.S. deferred tax liabilities,” according to a news release on the company’s earnings. 

The company said it expects to pay $15 billion in taxes over the next eight years due to a one-time tax in the new law on companies’ foreign earnings that have been held overseas: http://bit.ly/2Gvxv7R.

 

Flake: NAFTA has been ‘wonderful’ for US: Republican Sen. Jeff Flake (Ariz.) on Monday defended the North American Free Trade Agreement (NAFTA), saying the trade deal has been “wonderful” for the signatories even as the Trump administration negotiates to rework the pact.

“NAFTA has been wonderful for Mexico, Canada, and the United States,” Flake said during an event hosted by the Georgetown University Institute of Politics and Public Service.

Flake, a noted critic of President Trump, said the president has an “unhealthy” concern with trade deficits.

Flake’s comments come as negotiators discuss revising the pact on terms Trump finds more favorable for the U.S. On the campaign trail, Trump vowed to pull the U.S. out of the trade pact without better terms. Last month, though, Trump toned down his rhetoric, telling a farm group that he would negotiate a “better deal” for American businesses: http://bit.ly/2Gvznxk.

 

Liberal group releases State of the Union ad attacking Trump tax law: A progressive group released an ad Tuesday ahead of President Trump’s State of the Union speech to make the case that the new GOP tax law mostly benefits the wealthy.

The ad, from the Not One Penny coalition, splices together short segments of videos of Trump’s speeches in order to argue that the new law helps the rich and hurts the middle class.

Not One Penny said the ad is part of a five-figure buy and will air on cable television in the Washington, D.C., area.

“If Trump really wants to use the State of the Union to unite this country, the least he can do is be honest about the impact his tax plan will have on the people who trusted him,” said Nicole Gill, executive director of Tax March, whose group is part of the Not One Penny coalition.

“This tax plan was yet another broken promise from Trump and Americans will hold Republicans accountable for further rigging the system against middle class families.” http://bit.ly/2GwSM19.

 

Amazon, Berkshire Hathaway and JP Morgan Chase join to tackle health care costs: Amazon, Berkshire Hathaway and JPMorgan Chase announced on Tuesday that they’re working together to create a new health-care venture for their own staff aimed at “improving employee satisfaction and reducing costs.”

The three say that they will create a new, independent company “free from profit-making incentives and constraints” to reduce health-care costs for their employees, according to a statement they released on Tuesday.

“The health care system is complex, and we enter into this challenge open-eyed about the degree of difficulty,” said Amazon founder and CEO Jeff Bezos.

“Hard as it might be, reducing health care’s burden on the economy while improving outcomes for employees and their families would be worth the effort. Success is going to require talented experts, a beginner’s mind, and a long-term orientation.” http://bit.ly/2GwEihy.